Hydrogen’s Role in Power Markets and Freight Transportation to Achieve Carbon Neutrality
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Hydrogen’s Role in Power Markets and Freight Transportation to Achieve Carbon Neutrality

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Hydrogen is a flexible form of chemical storage and fuel for both power generation and transportation applications. In the context of decarbonization, hydrogen is the key technology at the highest renewable penetration percentages in the power generation sector. The transportation sector will likely be the primary driver for hydrogen demand due to the difficulty of decarbonizing heavy-payload long-distance freight applications. Hydrogen-based technology complementing other renewable resources must be well understood. Techno-economic analyses comparing power-to-gas (P2G) and battery energy storage systems (BESS) are carried out in both wholesale and retail settings. In addition, novel low-carbon fuel standard (LCFS) pathways are developed that utilize injecting hydrogen to promote increasing the gas grid’s renewable contents. Further, a feasibility analysis for a completely renewable fuel supply chain meeting a bottom-up estimated completely decarbonized freight demand in 2050 is executed. Finally, a spatially-resolved hourly annual California state power generation model is optimized to meet massive hydrogen demand. Assuming zero power-to-gas (P2G) capital costs, current market signals do not promote seasonal energy storage despite the need for at least 72 and 115 TBtu for an 87% and 90% renewable energy supply (RES%). Deploying P2G systems in distributed settings enables distributed PV resulting in similar increases to RES% compared to BESS. A LCFS pathway that promotes injecting hydrogen into the gas grid is the most profitable means of deploying electrolyzers in the short term. Distributed electrolyzers are found to only be able to inject in roughly 10% of distributed pipeline mains, suggesting significant investment is required on the transmission level. This is especially true as total transportation hydrogen demand in 2050 spans from 9-20 MMT/yr. Meeting 4.25 MMT/yr as opposed to 1.25 MMT/yr of hydrogen demand would result in an 8% increase in power generation sector cost, with the benefit of reducing carbon emissions by 73%, equivalent to a carbon abatement of 34 $/MTCO2e. A zero-carbon constraint on society would only further increase system costs by requiring more hydrogen production within the state, but hydrogen remains the only extensible renewable solution in completely decarbonizing both the power generation and transportation sectors due to the limitations of BESS.

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